ETF

Inroducing new T2108 pendulum; T2108 recovers from oversold 9.5% on Tuesday

@ 10:13 am
GMI0/6
GMI-R0/10
T210814%

My son and webmaster, Mike, has added a new visual representation of the Worden T2108 Indicator.   This indicator acts as a pendulum   of the market technicals, going from extreme readings of oversold, around 15% or below, and overbought, above 75%.   It seems to me to work better with oversold readings.     After an extreme oversold reading the market tends to rally quickly, as yesterday.

On the other end, especially in bull markets, it can remain above 75% for months.   On January 6, it topped out at 89%, and the present decline began right away.   At its low in October, it bottomed out around 1%.   Only at the 1987 crash, did it register a reading below 1%.   This bear market has resulted in very low readings, hitting 4.9% on November 2nd.

The indicator is charted daily in TC2007 back to October, 1986.   T2108 measures the percentage of all NYSE stocks that closed above their simple 40 day moving average.   The way I should use it during a bear market, is to not initiate new shorts when T2108 is oversold, and to watch for   retracements in my short stocks.   Another way would be to buy the Index ETF’s or options   when T2108 is very oversold.   Note, however, that if I do not post on a specific day, the pendulum will show its value as of the date and time of the last post.   Good luck using T2108!

GMI and GMI-R are back to zero, QQQQ in new down-trend; TSYS and GLD; short or in cash

@ 10:32 pm
GMI0/6
GMI-R0/10
T210821%

The GMI and GMI-R have been zero since Tuesday’s close.   There were 3 new highs and 424 new lows in my universe of 4,000 stocks on Wednesday. The Worden T2108 Indicator is now 21% and heading down from the reading of 89% on January 6.   In the November swoon, this indicator bottomed at 1.2%.   So we have a long ways to go to hit the same depths present at the November bottom.   The QQQQ is now in the 2nd day of a new short term down-trend.

If you go back a few posts you will see that I wrote that TSYS looked like a break-out from a cup-with-handle formation.   Well, that stock continues to surge higher and hit a nine year high ($9.93) on Wednesday.   William O’Neil has said not to buy break-outs in a bear market, but this may be the one needle in a haystack that will work out.   I continue to hold a few shares of TSYS…..

I am also holding puts on some stocks in my IRA.   One cannot use margin in an IRA so I cannot short stocks there.   But I can buy put options or inverse ETF’s.   I don’t know if it is too late to short weak stocks, but I know that buying stocks that are in down-trends has not worked for me.   Then again, my friend Judy does so well buying stocks that bounce off of their lows.   In fact, she recently bought GLD in the 70’s and still holds some.   Gold and silver (SLV) have been steadily advancing.   I remain mainly in cash.

The new 3x ETF’s–triple your pleasure — or pain

@ 3:59 pm
GMI2/6
GMI-R5/10
T210858%

As you know, when I try to trade the trend of the QQQQ, I buy QLD (ultra long) or QID (ultra short) ETF’s.   These ultra   ETF’s are designed to move twice as much as the underlying index they track.   Well, less well known is that there now exist 3x ETF’s, designed to move three times as much as the underlying index. I knew about the recent emergence of these Direxion ETF’s, but was surprised to see how quickly they have caught on.   I have now located 16 of them, and 8 of them traded more than one million   shares each on the NYSE on Friday.   Here are the ones I have found.   Bull ETF’s: FAS, BGU, TNA, ERX, EDC, MWJ, TYH, and DZK.   Bear ETF’s: FAZ, BGZ, TZA, ERY, EDZ, MWN, TYP, DPK .   One can even trade options on most of these!   Remember, the leverage works both ways, they aim to go up or down at 3x the speed of the relevant index.   Still, if I have a good idea of the trend, these ETF’s may prove better than going to the casino and putting everything on black or red………..

Meanwhile, the GMI

Read more